The environment for M&A is constantly changing, and opportunistic dealmakers have realized that they must be creative to stay competitive and scale their businesses. Some of this thinking has been accelerated by the recovery from the Covid-19 pandemic, but what remains constant is the fact that private equity still has record amounts of capital to deploy, and dealmakers are being more creative and disruptive than ever before.
Have buyers’ and sellers’ expectations changed? With additional challenges and increased risk in every transaction, how have dealmakers refreshed their toolbox? What type of deal structures are favorable in the current market conditions? Will SPACs continue to play a significant role in the M&A market?
New this year: The Deal Economy features a morning of panel discussions, an afternoon of unique breakout sessions and sector specific roundtable discussions along with increased networking opportunities topped off with The Deal Economy Cocktail Reception.
Join The Deal and a roster of senior corporate executives, private equity and institutional investors, and corporate advisers for The Deal Economy: Predictions and Perspectives. This event explores the opportunities, obstacles, and risks dealmakers face in the current environment and how to navigate through them.
Elizabeth Mily is Executive Vice President, Strategy & Business Development, at Bristol Myers Squibb. In this role, she oversees the company strategy and all business development activities, including strategic partnerships, mergers and acquisitions, as well as other strategic initiatives.
The M&A landscape is constantly changing, and the evolution of the dealmaking environment has been accelerated by the recovery from the Covid-19 pandemic, unprecedented stimulus packages and the change in U.S. administration. Deals that were put on hold have re-emerged, private equity still has record amounts of capital to deploy, and companies that were hit hard during the pandemic are reassessing strategies and noncore assets. What sectors should opportunistic dealmakers be exploring? What obstacles or pitfalls may affect deal flow? What role will M&A play in the overall global economic recovery?
Panelist: Yue Bonnet, Principal, The Carlyle Group
Panelist: Jelena Guzenko, Head of Mergers & Acquisitions, Americas, Siemens Energy
Elizabeth A. Mily, Executive Vice President, Strategy & Business Development, Bristol Myers Squibb
Private equity professionals continue to feel bullish and have a positive outlook for M&A, due to favorable credit conditions and large amounts of available dry powder. With the challenging conditions of the past year, PE firms are using partnerships, distressed deals, private credit and structured equity investments to remain flexible and creative. Will add-on acquisitions continue to be a favorable option to put capital to work with less risk? Will the market for exits via SPACs and IPOs stay strong? What are investor expectations for the rest of 2021?
Panelist: Vivianne Akriche, Managing Director, Eurazeo
Panelist: Jeffrey Armbrister, Managing Director, Hamilton Lane
Panelist: Ken Kencel, President and CEO, Churchill Asset Management
It’s clear that M&A will continue to be a key strategic pillar for companies, with dealmakers expecting mergers and acquisitions to contribute significantly to their growth over the next few years. A combination of defensive and offensive M&A strategies should develop as companies attempt to preserve existing markets, accelerate recovery, and position themselves for growth. How are buyers assessing valuations amid the recovery? Have sellers’ expectations changed? What type of deal structures are favorable in the current market conditions? With an awareness for increased risks, what type of insurance and risk mitigation strategies are being established to protect all parties in the deal?
Companies that transformed through innovation and technology during the pandemic have emerged stronger, with increased efficiency and new products and services that disrupted the market. Valuations remain high, targets are coming from a growing pool of sellers, paused deals are re-emerging and private equity still has record amounts of capital to deploy. What role will M&A play in the overall global economic recovery? What sectors are dealmakers looking at for growth? What is the outlook for fundraising, and alternative deal structures? Will cross-border and cross-sector deals present opportunity during the recovery? What obstacles may affect deal flow?
Panelist: Heather Madland, Partner, Huron Capital
When integrating two companies it is imperative that both companies understand the vulnerabilities, similarities and differences in corporate culture. No two companies are the same, and it is important that management understands both cultures and provides the right leadership to reconcile these differences and ensure that culture does not become the forgotten element in the integration.
Panelist: Alexandros Aldous, General Counsel, Corporate Secretary & Chief Government Relations Officer, The Chefs’ Warehouse, Inc.
Panelist: Zafar Hasan, Vice President, Global Head of Legal, Corporate, DXC Technology
Panelist: Ronald Prague, Chief Legal Officer, Synchronoss Technologies, Inc.
Tax policy may start to play a more significant role in M&A activity. With new corporate tax policies on the table, sellers may be seeking higher valuations to offset higher corporate tax rate and capital gains changes, and some deals may see more regulatory scrutiny. Even if these new corporate tax policies don’t curb deal volume, they may impact the pricing and cost of transactions. How will dealmakers approach transactions differently with an eye toward increased tax and capital gains policies?
Panelist: Doug Barnard, Senior Vice President, General Counsel, and Secretary, CF Industries
Panelist: Michael Hyun, Deputy General Counsel and Corporate Secretary, PSEG
International targets remain a focus for dealmakers seeking to increase scale and bolster global supply chains. With Brexit now complete, an EU-U.K. trade deal in place and a new U.S. administration in power, will we see a return to cross-border deals, particularly in Europe? Are there other jurisdictions that are ripe for U.S. cross-border activity?
SPACs, also known as blank-check companies, have seen a recent resurgence as the market deals with high levels of liquidity, depressed valuations and a strong appetite for growth companies. SPACs raise money in an IPO and place it in a trust while the sponsor looks for a target to acquire. Once the companies complete the merger, the target company becomes a listed stock. How are SPACs playing an increasingly significant role in the M&A market?
Panelist: David Dobkin, CFO, LifeSci Acquisition Corp.
ESG initiatives can severely impact profits and must be considered during the due diligence process of a transaction. How are buyers and investors evaluating targets based on ESG and sustainability transparency? How can these efforts affect valuations and sale processes? How do sellers ensure they are maximizing their ESG initiatives and show they are making progress on sustainability initiatives? What are the most important things for sellers to address when it comes to ESG?
- Capability expansion, enhanced logistics, fintech and DTC capabilities through M&A.
- Expanded product offerings and geographical reach.
- A more sustainability-focused future.
- Well-funded PE firms seeking value-creation opportunities in carve-outs.
- Continued divergence of trends within the sector as pandemic restrictions remain in place.
- Businesses with heavy exposure to retail, e-commerce or delivery should see strong demand.
- Companies geared to food service end markets will likely struggle until lockdowns are lifted.
- Increasingly health-conscious consumers will accelerate vitamins, supplements and businesses that offer healthier options.
- Companies with capital are finding opportunities to invest, but others continue to be stressed by unpredictable conditions.
- The transformation to net zero will influence M&A deals, and Covid-19 has accelerated the global transition to carbon-neutral and greener energy sources.
- The effect of Partnerships and investments in new technologies.
- The recovery from Covid-19 in industrial manufacturing deal-making has been muted relative to other sectors.
- As we emerge from the pandemic, M&A activity in the sector is anticipated to be fueled by access to emerging sources of capital and investment in innovation.
- How will the market react to greater governmental regulation, higher income tax rates, and a softening position on trade?
- Industrial manufacturing companies serving hard-hit end markets such as automotive and airlines will need to evaluate measures to maintain or improve their competitive position.
- Fintech investment has rebounded as investors and fintechs adapted to the new normal and identified opportunities arising from the Covid-19 environment.
- Increased demand for e-payments and contactless banking and a rise of e-commerce platforms.
- Focus on accelerated digital transformation, growth through M&A, and increased attention from regulators will impact deal flow.
- Continued investment in the payments space, an increase in fintech IPOs, and ongoing rebound of M&A activity is expected.
- Investors have maintained a high level of interest in the pharmaceuticals, life sciences and healthcare services sectors.
- Will M&A deal activity and valuations continue to run high?
- Who will be the winners and losers, post-vaccine and post-crisis?
- Continued growth is expected in cross-sector deals with digital and technology companies.
- Innovation and the need for scale will drive activity due to the uncertainty of regulatory, tax and drug pricing policies.
- Will large pharma continue to use M&A to achieve scale as companies look to invest for the long-term?
- Will new and larger players in specialty pharma do more bolt-on deals focused in traditional therapeutic areas, creating large upside potential for further M&A?
- After a push towards globalization, recent trends toward protectionism, driven by trade tension and the pandemic, has put more emphasis on the global supply chain.
- There is renewed optimism in the TMT sector as companies use M&A to adapt to an increasingly virtual world.
- Subsectors such as cinema, theatre and live events have experienced significant challenges, and this distress may drive M&A activity across the TMT landscape as companies look to restructure.
- Advances in technology such as industrial IoT, artificial intelligence, driverless cars and cloud computing will shape the future.
- With telecommunications companies progressing in the 5G rollout, will we see further consolidation as companies compete on a global scale?
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Experts discuss trends in the tech M&A market including virtual dealmaking, the proliferation of SPACs, stock sell-off and cross border deals.
Discussions for navigating the opportunities, obstacles and risks middle-market dealmakers face in the current environment.